TOKYO, Japan (CNN) -- Environmentally friendly hybrid cars are finally being mass-produced -- thanks to an increase in demand due to rising fuel costs, cheaper technology and growing public acceptance.

Viewed in the industry as the most important innovation since automatic transmission or the self-starting motor, hybrid vehicles run on two power sources: a standard combustion engine, backed up by an electric battery.

Japanese car makers Toyota and Honda have both been producing hybrid cars since the late 1990s.

And while hybrids still make up a fraction of all vehicles manufactured, the two automakers look set to put the latest eco-friendly technology up against each other, as the hybrid vehicle becomes accepted by the masses.

Toyota's hybrid Prius sedan, the first mass-produced environmentally friendly vehicle, is so popular that waiting lists in the U.S. are months long.

It is so high-tech, it can even park itself.

Toyota spokesman Paul Nolasco said hybrids were becoming increasingly popular among consumers.

"This car is not a science experiment. It's a real car -- it's very practical -- that you can use in daily life," he told CNN.

Honda has also joined the hybrid party, with the Civic hybrid and a V6 version of its popular Accord car. Ford has come out with a hybrid version of its SUV Escape.

Honda spokesman David Iida said these vehicles were good news for the environment.

"Basically, Honda's philosophy is to introduce environmentally friendly technologies in cars that are mass-produced. That way we can get the biggest effect on the environment as quickly as possible," he said.

Iida said that hybrid vehicles were paving the way for more advanced environmentally friendly technology.

"In the future we see this (hybrid cars) as an interim technology. In the future -- long-term -- fuel cells (may be) the best alternative."

The combustion engine in hybrids kicks in only when required, at higher speeds, for example. When the vehicle is stationary at lights or stuck in traffic jams, the combustion engine is less likely to be running, which means less fuel use, and no polluting emissions.

There is no need to recharge the car's battery; it is replenished by the engine or from energy created by friction from the car's brakes.

Kurt Sanger, auto analyst at Macquarie Securities, said the production of hybrids was still in its infancy.